SOFTDOT HI-TECH EDUCATIONAL & TRAINING INSTITUTE

L-I International Marketing

International Marketing- According to cateora “(1997) defines international marketing as performances of business activities that direct flow of company’s goods and services to consumers in more than one nation for profit.”

Importance of international marketing

(A)Macro level benefits in national perspective

(i)Increase in national income

(ii)Efficiency

(iii)Employment generation

(iv)Increased linkages

(v)optimal utilization of resources

(vi)Educative effect

(vii)Promotes foreign direct investment

(viii)Stimulates competition

(ix)Technology sourcing

(B)Micro level effects of international business

(i)Growth

(ii)Fighting Competition

(iii)increased efficiency

(iv)Scale economics

(v)Innovation

(vi)Risk cover

International Trade Vs International Business

International Trade-International trade is refer to the movement of goods and services between countries. It reflects macro aggregate supplies and demand in different countries. It includes major policy decisions by government with regards to important and export. It follows all WTO guidelines.

International Business-It refers to those business transaction among individuals, firms or corporate entities in private or public sector that result in movement of goods or services, the investment of capital and transactions in intangible assets (e.g.) trademarks, patents etc.)

Comparing domestic and international business

(i)Process of Marketing-There are two processes

  • Technical and social
  • Technical process-Cost, brand, product and price
  • Human factors-Human behaviour, customs attitudes, values etc.
  • International business sociological & cultural factors predominate the decision making with regard to marketing mix.

(ii)Marketing Environment

  • Environment factors such as economics, politico legal geographic cultural and completion are uncontratable in international business.
  • Different countries have different currencies, accounting practices, legislation, interest rates inflation etc.

Multinational Corporation (MNC)

Multinational corporations are those which engaged in the international business or carried out their business activities across the boundary of nation.

Characteristics

  • Operates in number of countries
  • It has global orientation in investment.
  • Top level management has global sourcing of inputs.
  • MNC’s are innovative and investment and investment deriven enterprises.
  • The MNCs have been in valued in liberalization and globalization of world economy.
  • The MNCs exercise market power by virtue of the enormous size and resources.
  • The MNC’s have been actively instrumental in the process of liberalization and globalization of world economy.

Approaches to international marketing / international business

Domestic marketing extension (ethnocentric) concept:

This concept is usually preferred by small companies, or even by large companies operating in a competitive industry. It generally focus on domestic market. Its overseas operations of such companies are usually restricted to exports in certain niches.

Multi domestic marketing (polycentric) concept:

Companies carried out its operation in different countries in different forms such as joint ventures, licensing agreements, overseas manufacturing and marketing. It opens its branches or subsidiaries in different countries. Subsidiaries behave like domestic companies only get guidelines from head office.

Global Marketing (regiocentric) concept

(i)Companies operates in different countries.

(ii)Companies try to find out lucrative business opportunities.

(iii)They set up their plants there where they find cheap resources.

(iv)Companies diversified themselves as per global change.

Adverse effects of foreign trade on the National Economies:

There are some assumptions

  • Developed countries exploit the resources of less developed countries.
  • Give tough competition to less developed companies
  • Developed companies have better resources and funds.

Global Symbiosis

  • All countries are inter dependent with each other.
  • Countries are trying to develop healthy relationship.
  • All the business activities have been globlized.
  • Countries utilizing their resources fully.
  • Developed countries are in need of market where as developing nations need latest technology.
  • It promotes global ties among countries.
  • It promes healthy relations and companies.

The Process of Internationalization of Business

Typical Sequence of overseas expansion

(i)Exporting

  • Companies carried out business activities across the boundary of the nations.
  • Companies can find out a market.
  • It helps the companies to create better demand of its product.
  • Companies can beat the competition properly.
  • Countries can earn foreign revenue.
  • Managers can learn how to handle overseas market.

(ii)Licensing-

  • It is an arrangement by which a firm transfers its intangible property rights.
  • It does not have huge investment
  • Both the parties are benefited by licensing.
  • It is preferred mode of entry in technology-driven business such as software, electronic, hardware, pharmaceuticals etc.

(iii)Joint Ventures

  • It is established by MNC’s with local companies to minimize the risk.
  • MNC provides inputs or technology to the local firm to grow.
  • The level of investment and risk associated in foreign market is low.
  • Difference in working style is a problem.

(iv)Turnkey Project-

  • It is a package deal in which MNC construct a production facility.
  • When the plant become operational key will be hnd over the local planter country.
  • It helps to develop the core competencies of the firm.
  • Hast country can develop infrastructure and get lasted technology.
  • Some countries do not allow foreign companies to participate.

Overseas Production

  • All the companies want to set up international production centers.
  • There is a high degree of risk involved.
  • Firms have to develop understanding with local politics social and cultural factors.
  • Through this firms earn huge profit.

Differences in export sale and international marketing

Export SalesInternational Marketing

1.To realize short run goalTo realize long run goals

2.No systematic selection Systematic selection of

of marketmarket

3.Min. resource commitmentSufficient resource

to gain immediate salescommitment permanent

market position

4.Development of productsDevelopment of products

for home marketfor home as well as foreign markets

5.Minor product adaptationMajor product adaptation

necessary mandatory legalto suit to satisfy foreign

obligations.buyers.

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New Delhi